As a business owner, securing suitable commercial space is a necessity. However, finding an optimal workspace is often challenging as you weigh the costs and benefits of purchasing versus renting. While owning your own commercial property may seem appealing in some ways, renting frequently provides significant advantages for small businesses. Consider these five benefits of renting retail space or offices over buying your own building.
1. Avoid Large Upfront Costs And Debt
Purchasing commercial real estate requires a massive upfront investment that is out of reach for most small businesses. Commercial spaces require a sizable down payment, and the business must take on a mortgage to finance the remaining amount owed. The debt from this mortgage ties up capital that could otherwise be used to grow the business.
Renting, on the other hand, only requires paying the first month’s rent and a security deposit upfront. The business is not saddled with a mortgage, freeing up funds that would have gone toward a down payment and payments.
2. Gain Flexibility To Relocate Or Resize Easily
As a renter, it is far easier to relocate to a new space or resize into a smaller or larger space to suit your changing needs. When buying, you are locked into that space, and any move would require selling the property which can take months or years and result in losses.
With a rental, you simply need to provide notice to the landlord as outlined in your lease agreement, typically 3 to 6 months, and you can move on. Resizing or relocating is as simple as finding a new rental space that meets your needs. This flexibility is invaluable for new and growing businesses.
3. Avoid Maintenance And Repair Costs
Responsibility for maintenance, repairs, and renovations to the space typically falls onto the property owner rather than the tenant. As a renter, you avoid having to pay for expensive structural issues like roof repairs or plumbing overhauls.
All you need to handle is basic upkeep to keep the interior of your space clean and functional. If there are any major repairs required during your lease period, the landlord will usually handle and pay for them. This passes on a major expense and hassle to the owner rather than you as the renter.
4. Obtain Retail Space For Lease In Prime Locations
Desirable commercial space in prime locations often comes at a premium price, especially for buyers. For small businesses, the cost to purchase space in a high-visibility, high-traffic area may be prohibitive. As a renter, you can often lease coveted retail space for lease in Tempe or other sought-after areas at a more affordable rate. While your rent may still be higher in a prime spot, it requires no long-term debt or huge capital outlay to obtain that space. You still gain the benefits of lots of foot traffic and exposure without the permanent financial burden.
5. Avoid Property Taxes And Insurance Costs
As an owner of commercial real estate, you become responsible for expenses like property taxes, property insurance, and liability insurance for the space. Annual property taxes on commercial properties are typically substantial and continue to increase over time.
As a tenant, you avoid these recurring costs which are passed through to the landlord. Your lease payments represent the total cost to occupy that space. All taxes, insurance, and related expenses are handled and paid by the property owner, leaving your lease payment as the sole predictable cost for your space each month.
To Wrap Up
For new and established small businesses alike, renting offers benefits over buying in many cases. When factoring in lower upfront costs, greater flexibility, fewer maintenance responsibilities, prime locations more accessible, and fewer ongoing expenses, leasing commercial space frequently provides a more affordable and practical option versus purchasing your own property. While buying does have its own advantages for some, renting is certainly worth considering for any business in need of a suitable workspace.
